La Balsa

Recent Project Developments

The Company initiated operations for the development of the La Balsa project in February 2006. At that time, General Manager Brian K. Jones established residence in Lazaro Cardenas, Mexico, an office and warehouse space was leased and outfitted, and a development team comprising mainly local Mexican nationals was assembled. Phase I diamond drilling operations began on April 1, 2006.

The objective of the Phase I drill program at La Balsa was to delineate the previously identified deposits on the property, La Virgen,,Iguana Prieta, and Playa Azul, and to bring the resource into compliance with NI43-101. Further to this, in early 2008, a NI43-101 Technical Report on the La Balsa project focusing on these three initial deposits (La Virgen, Iguana Prieta and Playa Azul) was completed by Behre Dolbear, an internationally respected independent engineering firm.

In 2007, Samuel Fernandez Castaneda, a veteran Mexican mining engineer, was retained to generate an internal pre-feasibility study that includes an ore reserve estimate, development plan, and capital and production costs for the initial phase of the operation at La Balsa. Mr. Fernandez will also manage the next phase of the project, the compilation of a definitive feasibility study of the La Balsa project.

The definitive feasibility study will evaluate a development strategy to produce both the oxide and sulphide mineralization with a combination of an SXEW plant and a conventional flotation mill. The study will include a detailed time line for all phases of project development. Baseline environmental studies for the leaching phase of the operation are complete, an SXEW plant has been acquired, and evaluations for mine design and construction are ongoing. The next step in the development process is the completion of a definitive feasibility study. The company plans a parallel path of mining the currently defined mineral inventory and expanding on this inventory through continued exploration.